Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Drug companies allegedly engaged in generic digoxin, doxycycline price fixing conspiracy, (May 9, 2016)

By Linda O’Brien, J.D., LL.M.

Generic drug manufacturers engaged in an anticompetitive scheme to fix the prices and allocate markets and customers for the generic digoxin and doxycycline tablets, according to a complaint filed in the federal district court in Philadelphia (UFCW Local 1500 Welfare Fund v. Allergan plc, May 5, 2016).

UFCW Local 1500 Welfare Fund is an employee welfare benefits fund that provides health and welfare benefits to workers in the grocery industry.

Digoxin is prescribed for the treatment of atrial fibrillation and other cardiac ailments. Doxycycline is a broad-spectrum antibiotic used for the treatment of a variety of bacterial infections. Lannett Company, Impax Laboratories, West-Ward Pharmaceuticals, Mylan Pharmaceuticals, Sun Pharmaceutical Industries, and Par Pharmaceuticals manufacture and distribute generic digoxin. West-Ward, Allergan plc, Mylan, Sun, and Par manufacture and sell generic doxycycline.

The complaint states that the introduction of generic versions of branded drugs into the market leads to lower prices for consumers and third-party payors. Studies have shown that the resulting competition of generic drugs causes rapid erosions in the prices of those drugs and increased market share. In 2013, generic drugs accounted for 86 percent of all drugs dispensed in the United States.

The price for generic digoxin remained steady from 2005 until October 2013, at which time the retail price increased dramatically, the complaint claims. The price increases were caused by pricing changes by the defendant drug companies. For example, in November and December 2013, the price for .125 mg and .250 mg tablets of digoxin increased more than 800 percent. Data from the National Average Drug Acquisition Cost (NADAC) on generic digoxin show price increases that led to identical prices for Lannett’s, West-Ward’s, and Impax’s generic digoxin products. Similarly, the NADAC data for 100 mg generic doxycycline hyclate tables manufactured by Allergan and West-Wart increased over 8,000 percent since October 2013.

There was no market-based justification for the increase in pricing by the drug companies, according to the plaintiff. The defendants reaped substantial profits from their collusive practices and accomplished their price fixing through the exchange of confidential information, including pricing, costs, manufacturing, and supply issues. The exorbitant price increases by the generic drug manufacturers led to inquiries by Congress. Additionally, in 2014 the U.S. Department of Justice and Connecticut Attorney General began investigations into whether a conspiracy took place to increase the prices of generic digoxin and doxycycline.

The complaint also alleges that the structure and characteristics of the generic digoxin and doxycycline markets make them conducive to collusion and price fixing by the defendant drug companies. The factors include (1) high barriers to entry; (2) inelasticity of demand; (3) the status of generic digoxin and doxycycline as commodity products; (4) the highly concentrated markets for generic digoxin and doxycycline; and (5) the defendants’ opportunities to conspire at trade association meetings.

The plaintiff asserts claims for unjust enrichment and a conspiracy in restraint of trade in violation of Section 1 of the Sherman Act and various state antitrust laws. The action seeks declaratory and injunctive relief, treble damages, disgorgement, restitution, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 2:16-cv-02169-CMR.

Attorneys: Mark Goldman (Goldman, Scarlato & Penny P.C.), Gregory S. Asciolla (Labaton Sucharow LLP), and Roberta D. Liebenberg (Fine, Kaplan and Black, R.P.C.) for UFCW Local 1500 Welfare Fund.

Companies: Lannett Company, Inc.; Impax Laboratories, Inc.; West-Ward Pharmaceuticals Corporation; Allergan plc; Mylan Pharmaceuticals, Inc.; Par Pharmaceuticals Companies, Inc.; Sun Pharmaceutical Industries, Inc.

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